Q and A with the experts: Optimizing your retirement savings

Thursday, August 5, 2021

Researcher provides insight into how pension holders can manage their investments to improve the odds that their retirement savings will last.

By Media Relations

Ken vetzal

Increasing uncertainties in market returns, government benefits and the rise in the cost of living is a growing concern for many who fear they may outlive their retirement savings. Professor Ken Vetzal of the School of Accounting and Finance explains how pension holders can manage their investments to improve the odds that their retirement savings will last.

Why is there a growing concern that retirement savings may not last the life of a retiree?

There are several reasons:

  • Improved longevity: The longer savings are needed to fund retirement, the greater the chance of running out of money.
  • Low interest rates: Investors must rely on riskier investments such as stocks compared to safer investments in bonds to obtain sufficient returns.
  • The shift from defined benefit (DB) to defined contribution (DC) pension plans: Investments in DC plans are managed by plan members who may lack the necessary skills. Inappropriate investments can increase the chance of exhausting savings.